About City Holding

City Holding Company (City Holding) operates as a financial holding company. The company conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia ('City National'). City National provides banking, trust and investment management and other financial solutions through its network of bank branches and full-time equivalent associates located in West Virginia, Kentucky, Virginia and southeastern Ohio. The company's business activities are limited to one reportable business segment, which is community banking. The principal products produced and services rendered by City National include: Commercial Banking - City National offers a full range of commercial banking services to corporations and other business customers. Loans are provided for a variety of business purposes, including financing for commercial and industrial projects, income producing commercial real estate, owner-occupied real estate and construction and land development. City National also provides deposit services for commercial customers, including treasury management, lockbox and other cash management services. City National provides merchant credit card services through an agreement with a third party vendor. Consumer Banking - City National provides banking services to consumers, including checking, savings and money market accounts, as well as certificates of deposit and individual retirement accounts. In addition, City National provides consumers with installment and real estate loans and lines of credit. City National also offers credit cards through an agreement with a third party vendor. Mortgage Banking - City National provides mortgage banking services, including fixed and adjustable-rate mortgages, construction financing, land loans, production of conventional and government insured mortgages, secondary marketing and mortgage servicing. Wealth Management and Trust Services - City National offers specialized services and expertise in the areas of wealth management, trust, investment and custodial services for commercial and individual customers. These services include the administration of personal trusts and estates, as well as the management of investment accounts for individuals, employee benefit plans and charitable foundations. City National also provides corporate trust and institutional custody, financial and estate planning and retirement plan services. At December 31, 2023, approximately 47% of the company's loan portfolio was categorized as residential mortgage and home equity loans. At December 31, 2023, approximately 51% of the company's loan portfolio was categorized as commercial and industrial and commercial real estate. City National's loan portfolio is consisted of commercial and industrial, commercial real estate, residential real estate, home equity, consumer loans and demand deposit account ('DDA') overdrafts. City National's commercial and industrial loan portfolio consists of loans to corporate and other legal entity borrowers, primarily small to mid-size industrial and commercial companies. Commercial and industrial loans typically involve a higher level of risk than other loan types, including industry specific risks such as the pertinent economy, new technology, labor rates and cyclicality, as well as customer specific factors, such as cash flow, financial structure, operating controls and asset quality. Collateral securing these loans includes equipment, machinery, inventory, receivables and vehicles. As of December 31, 2023, City National reported $427 million of loans classified as 'Commercial and Industrial'. Commercial real estate loans consist of commercial mortgages, which generally are secured by nonresidential and multi-family residential properties, including hotel/motel and apartment lending. Commercial real estate loans are provided to many of the same customers and carry similar industry and customer specific risks as the commercial and industrial loans, but have different collateral risks. In order to group loans with similar risk characteristics, the portfolio is further segmented by product types: Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties. The Hotel portfolio is consisted of all lodging establishments. Multi-family consists of 5 or more family residential apartment lending. Non-residential commercial real estate includes properties such as retail, office, warehouse, storage, healthcare, entertainment, religious, and other nonresidential commercial properties. The non-residential product type is further segmented into owner- and non-owner occupied properties. Residential real estate loans represent loans to consumers that are secured by a first priority lien on residential real property. Residential real estate loans include loans for the purchase or refinance of consumers' residences and first-priority home equity loans allow consumers to borrow against the equity in their home. These loans primarily consist of single family three- and five-year adjustable rate mortgages with terms that amortize up to 30 years. City National also offers fixed-rate residential real estate loans. Residential purchase real estate loans are generally underwritten to comply with Fannie Mae and Freddie Mac guidelines, while first priority lien home equity loans are underwritten with typically less documentation, lower loan-to-value ratios and shorter maturities. Additionally, the company periodically purchases residential mortgage loans. The credit and collateral documents for each potential purchased loan are reviewed to ensure the credit metrics are acceptable to management. City National's home equity loans represent loans to consumers that are secured by a second (or junior) priority lien on residential real property. Home equity loans allow consumers to borrow against the equity in their home without paying off an existing first priority lien. These loans include home equity lines of credit ('HELOC') and amortized home equity loans that require monthly installment payments. Second priority lien home equity loans are underwritten with less documentation than first priority lien residential real estate loans but typically have similar loan-to-value ratios and other terms as first priority lien residential real estate loans. The amount of credit extended under these loans is directly related to the value of the real estate securing the loan at the time the loan is made. All mortgage loans, whether fixed rate or adjustable rate, are originated in accordance with acceptable industry standards and comply with regulatory requirements. Fixed rate mortgage loans are processed and underwritten in accordance with Fannie Mae and Freddie Mac guidelines, while adjustable rate mortgage loans are underwritten in accordance with City National's internal loan policy. Consumer loans may be secured by automobiles, boats, recreational vehicles, certificates of deposit and other personal property, or they may be unsecured. Market Area City National operates a network of bank branches primarily along the I-64 corridor from Lexington, Kentucky through Lexington, Virginia and along the I-81 corridor through the Shenandoah Valley from Lexington, Virginia to Martinsburg, West Virginia. City National's branch network includes various branches in West Virginia, Kentucky, Virginia and Ohio. City National provides credit, deposit and investment advisory products and services to a broad geographical area that includes many rural and small community markets in addition to larger cities including Charleston (WV), Huntington (WV), Martinsburg (WV), Ashland (KY), Lexington (KY), Winchester (VA) and Staunton (VA). In addition to its branch network, City National's delivery channels include automated-teller-machines ('ATMs'), interactive-teller machines ('ITMs'), mobile banking, debit cards, interactive voice response systems, and Internet technology. City National also provides commercial products and services to customers that are outside of its branches' geographical footprint. These loans are diversified across a broad base of industry types, including multi-family housing properties, properties leased to government agencies, nursing homes, grocery and retail stores, and other commercial and industrial loans. On March 10, 2023, the company acquired 100% of the outstanding common shares of Citizens Commerce Bancshares, Inc. ('Citizens') and its principal banking subsidiary, Citizens Commerce Bank of Versailles, Kentucky. Investments The majority of the company's investment securities continue to be mortgage-backed securities. These securities are collateralized by both residential and commercial properties. The mortgage-backed securities in which the company has invested are predominantly issued by government-sponsored agencies such as Fannie Mae, Freddie Mac and Ginnie Mae. As of December 31, 2023, the company's investment portfolio included obligations of states and political subdivisions; mortgage-backed securities, such as the U.S. government agencies and private label; trust preferred securities; and corporate securities. Deposits As of December 31, 2023, the company's deposits were noninterest-bearing deposits; and interest-bearing deposits, such as demand deposits, savings deposits, and time deposits. Regulation and Supervision As a financial holding company, the company is regulated under the Bank Holding Company Act of 1956, as amended (the 'BHCA'), and is subject to inspection, examination and supervision by the Board of Governors of the Federal Reserve Board. The BHCA provides generally for 'umbrella' regulation of bank holding companies, such as the company by the Federal Reserve Board, and for functional regulation of banking activities by bank regulators, securities activities by securities regulators, and insurance activities by insurance regulators. The company is also under the jurisdiction of the Securities and Exchange Commission ('SEC') and is subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC. City National is organized as a national banking association under the National Bank Act of 1863, as amended (the 'National Bank Act'). It is subject to regulation and examination by the Office of the Comptroller of the Currency ('OCC') and the Federal Deposit Insurance Corporation ('FDIC'). The OCC's supervision and regulation of banks is primarily intended to protect the interests of depositors of the banks and FDIC's insurance fund. The company and its subsidiary bank and other subsidiaries are 'affiliates' within the meaning of the Federal Reserve Act. Further, City National's authority to extend credit to the company's directors, executive officers and principal shareholders, including their immediate family members, corporations and other entities that they control, is subject to the restrictions and additional requirements of the Federal Reserve Act and Regulation O promulgated thereafter. City National received a 'satisfactory' rating on its most recent CRA (the Community Reinvestment Act of 1977) examination in 2022. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the 'Dodd-Frank Act') was enacted in July 2010 and implemented far-reaching changes across the financial regulatory landscape, including provisions that impact the company's operations and regulation of the company in the following ways, among others: Centralize responsibility for consumer financial protection by creating a new agency, the Consumer Financial Protection Bureau, which has rule making authority for a wide range of consumer protection laws that apply to all banks and has broad powers to supervise and enforce consumer protection laws; Require the OCC to seek to make its capital requirements for national banks countercyclical so that capital requirements increase in times of economic expansion and decrease in times of economic contraction; Require financial holding companies, such as the company, to be well-capitalized and well-managed; Provide for an increase in the minimum reserve ratio for the FDIC deposit insurance fund from 1.15% to 1.35% and changes in the basis for determining FDIC premiums from deposits to assets; Repeal the federal prohibitions on the payment of interest on demand deposits; Amend the Electronic Fund Transfer Act ('EFTA'); Enhance the requirements for certain transactions with affiliates under the Federal Reserve Act; Strengthen the existing limits on a depository institution's credit exposure to one borrower; Strengthen loan restrictions to insiders; and Increase the authority of the Federal Reserve Board to examine the company and its non-bank subsidiaries. The CFPB has also promulgated rules under the Equal Credit Opportunity Act, the Truth in Lending Act, and the Real Estate Settlement Procedures Act, all of which impact the company's loan origination and servicing operations. The company is also subject to the Gramm-Leach Bliley Act of 1999, which governs the distribution and protection of information about its customers, the Equal Credit Opportunity Act, which ensures fair and nondiscriminatory lending practices, the Truth in Lending Act and Truth in Savings Act, which makes it easier for customers to compare products and services offered by financial institutions, the Home Mortgage Disclosure Act, which imposes additional disclosure requirements on the company related to information about its mortgage lending, and other federal and state laws and regulations. Substantially all of the deposits of City National are insured up to applicable limits by the Deposit Insurance Fund ('DIF') of the FDIC and are subject to deposit insurance assessments to maintain the DIF. History City Holding Company, a West Virginia corporation, was founded in 1957. The company was incorporated in 1981.